Nebraska Could Be a Leader in Regulatory Reporting

Chairman Brewer and members of the committee:

Thank you for the opportunity to submit this written testimony. My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University and an adjunct professor at the Antonin Scalia Law School. My research focuses on state regulatory institutions, economic growth, and the economic analysis of regulations.

My testimony today centers around Legislative Bill 857 (LB857), which is currently being considered by this committee. Specifically, I have two main points to convey:

1. Nebraska is taking important steps toward ensuring regular review of regulations, but further reforms will be needed in order to guarantee that reviews are substantive.
2. Moving timelines up, extending reviews to all existing regulations, and beefing up reporting requirements could make Nebraska a leader in regulatory reporting, which other states would be wise to emulate.

Background

To the Nebraska Legislature’s credit, the Government, Military and Veterans Affairs Committee is considering legislation that would require a review of agency administrative regulations. Specifically, LB857 would require that regulations put into effect between January 1, 2021, and December 31, 2028, would have to be reviewed a decade after their effective date. As part of that review, a report would be compiled by each state agency, which would include details about the statutory authority for regulations as well as an assessment of whether rules are accomplishing their intended goals or need revision.

Such a reform would be a productive first step for Nebraska, as retrospective review of regulations helps ensure that policymaking is effective and evidence based. Indeed, every state should have a system for reviewing the regulations it has on the books. This is just common sense and helps explain why both major political parties often make retrospective review of regulations a priority. This is especially important in Nebraska, which at the present time has no substantive process for reviewing regulations, and which has been criticized for lacking transparency in its regulatory process.

Recommendations

LB857 is a step in the right direction, but as it is currently written it would only produce a one-time review of some (not all) regulations in Nebraska, and it would do so roughly a decade in the future. This is a long time for state residents to wait for regulatory relief. Furthermore, very little information would be collected by state agencies if all they do is report the information mandated by LB857. To ensure a more rigorous review of existing regulations, I have the following recommendations:

1. It is important that all regulations in Nebraska be reviewed, not just those regulations that will go into effect in the coming eight years. Nebraska currently has more than 100,000 regulatory restrictions on the books. It is almost certainly the case that many of these requirements have never been reviewed.
2. Reports produced as a result of agency reviews should be due soon. In recent years, states have conducted reviews of their regulatory codes similar to the one envisioned in LB857. For example, Virginia, which has more regulation than Nebraska (133,000 regulatory restrictions as of 2016), ordered a review of its regulatory code in 2018. Initial reporting started to occur in just a few months, in late 2018, and all regulatory departments are expected to have reviewed their rules by mid-2020. This example demonstrates how a government-wide review of regulations can be accomplished on a relatively short timeline.
3. Reports should highlight whether regulations are mandated by state or federal law or whether they are discretionary on the part of the regulating agency. This approach has been followed in Arizona as well as in Virginia. This is critical information, as it demonstrates to governors what is in their authority to change without legislative action and demonstrates to legislators what modifications would require a legislative solution.
4. Reports should include a count of regulatory requirements or restrictions. A fundamental part of regulatory reform is having a concrete measure of regulation. Requiring agencies to produce this information provides crucial transparency and would result in an official count of Nebraska rules. Some states, such as Idaho and Missouri, have opted to use the Mercatus Center’s regulatory restriction measure. Other states, such as Virginia, have opted to produce a manual count of regulatory requirements under each department’s purview. Both are sensible approaches that Nebraska could emulate.
5. A summary report should be produced by the clerk of the legislature, and reporting should occur on an annual basis and continue indefinitely, not just for eight years. One option would be to have agencies do an initial review of their rules, to be completed in a year or two, just as Virginia has required. As LB857 requires, agencies should then submit reports to the clerk of the legislature, but the clerk should also publish a summary report, compiling information from the agency-specific reports. This process should occur each year and continue indefinitely.
6. Agency reports should include plans for how agencies will reduce regulatory burdens. Agencies are likely to learn a lot during their reviews and are likely to find many obsolete or otherwise unnecessary regulations. These regulations should be identified in reports, and agencies should make recommendations as to statutory changes needed to further enable regulatory relief. New Jersey is a state that has produced some excellent reports along these lines, which can serve as a model (one is included as an attachment to this testimony).

Conclusion

Governor Ricketts has made regulatory reform a priority of his administration. It is encouraging to see the legislature prioritizing regulatory reform as well, as exemplified by LB857. However, as it is currently written, LB857 will likely result in less effective retrospective review of regulations than it could have. However, LB857 could be amended to begin to shine a light on the regulatory landscape in Nebraska.

This testimony has offered suggestions for ways retrospective review of regulations and corresponding reporting could be improved in Nebraska. Specifically, timelines should be moved up, reviews should extend to all existing regulations (not just new ones), and reporting should be ongoing and more detailed. Including a mandate that state agencies produce a count of regulatory requirements under their purview would also add much-needed transparency to what is currently a highly opaque state regulatory system.

These small but substantive changes could make Nebraska a leader in regulatory reporting and a model for other states. Thank you again for the opportunity to submit this testimony. Feel free to reach out with any questions.